The city of Schenectady is likely to face a budget deficit once the 2017 fiscal year comes to a close, due in large part to the significant shortfall in the revenue received from the casino that opened there early last year.
According to Mayor Gary McCarthy, the city had projected that they would receive approximately $2.75 million in revenue from the Rivers Casino and Resort. But the final number is likely to be approximately $2.1 million instead, coming up about $600,000 short of expectations.
Exact numbers won’t be available until mid-February, when the city closes out its accounting for the previous year.
The lack of tax revenue from the resort came as a surprise to many city officials. Last year, Finance Commissioner Tony Ferrari had told the Times Union that the city was using the $2.75 million figure for budgeting because it was the low end figure provided in an analysis from an outside agency.
New York Casinos Failing to Meet Expectations
The shortfall follows a trend that has been seen at all three upstate New York casinos during their first year of operation. Along with the Rivers Casino, new resorts in the Finger Lakes and at Tioga Downs are also failing to meet their own projections, with tax revenues from each of these venues coming in well below what the state and local governments were told to expect when these casinos were first proposed.
Officials have largely said they’re not worried about these figures just yet. Further developments at each site could help attract more visitors. And last year, Governor Andrew Cuomo (D) said he preferred to focus on the positive aspects of the upstate casinos.
“They’ve all been wildly successful in creating jobs and building beautiful complexes,” Cuomo said in August.
But others, including Tioga Downs owner Jeff Gural, say that the regional gambling market has become oversaturated. And the situation in Schenectady shows that there are consequences when resorts fail to meet expectations.
Lower Revenues Mean Less Tax Relief for Residents
When the city first decided to support a casino proposal in 2014, one of the stated benefits was the ability to reduce property taxes by 18 percent after the resort opened.
But that was based on revenue projections from the state. Now that the real numbers are in, the 2018 budget includes just a one percent reduction in property taxes, which is offset by increased sewer and water rates.
It also resulted in what the mayor is calling a small deficit, though he reiterated that the result wasn’t likely to cause any stress on the city budget.
“We have a good management team in place and the numbers will be well within what is manageable,” McCarthy said during his state of the city speech.
The Rivers Casino and Resort was developed by Rush Street Gaming and the Galesi Group. The property, which cost $330 million to build, was built on the former site of Alco, and is part of a larger effort designed to rejuvenate the former industrial site.